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11/04/2011 @ 10:05AM1,855 views

U.S. Adds 80K Jobs In October, Signs Of Hope Not Enough To Counteract Europe

The U.S. economy added 80,000 jobs in October, and the unemployment rate was little changed at 9%.

The Bureau of Labor Statistics report showed that the nonfarm payrolls gain was driven by an increase of 104,000 jobs on private sector payrolls. Overall and private sector job growth were both short of the consensus view, which called for 95,000 on the former and 125,000 on the latter. Nonfarm payrolls figures were revised higher for both September (158,000 from 103,000) and August (104,000 from 57,000).

Ian Shepherdson, chief U.S. economist at High Frequency Economics, says that October’s tepid figure masks the broader trend of private jobs averaging 122,000 in the three months to November, compared to 107,000 in the three months to August.

Friday’s data mark another signal that while the U.S. economy is certainly not in fighting shape, it is not quite in a coma either. Drilling down past the headline figures shows that the number of employed persons working part time for economic reasons declined by 374,000 to 8.9 million, while the number of “discouraged workers” — those neither working nor looking for work — was at 967,000, down 1.2 million from a year ago. The tally of those unemployed for 27 weeks or more was down 366,000 to 5.9 million (42.4% of unemployment).

Other secondary data showthe average workweek for all employees was flat at 34.3 hours in October, but the manufacturing workweek was up 0.2 to 40.5 hours. On the pay side, average hourly earnings increased 5 cents, or 0.2% to $23.19. Over the last year that figure is up 1.8%, hardly robust in an environment where volatile food and energy prices have hit American household budgets hard, but still a move in the right direction.

Shepherdson also points to three straight strong readings from the household employment survey, which was up 277,000 in October. “Over time there is no clear tendency for household to lead payrolls,” the economist writes in a note Friday, “but this is a curious development. Coupled with the clear strengthening in hiring of temp…the case for better payrolls in the not-too-distant future is building.”

Wall Street had a measured reaction to Friday’s jobs number, with the major indexes trading lower in the first 30 minutes of trading. The Dow Jones industrial average was down 119 points to 11,926, the S&P 500 off 14 points to 1,247 and the Nasdaq 28 points lower at 2,670.

Jeff Kleintop chief market strategist at LPL Financial, said that while the report had some encouraging elements, “it’s not enough to shake the market’s attention away from Europe.” The ongoing turmoil across the Atlantic — stress is high over whether Greece will go along with the requirements of its latest bailout — is overshadowing what is a solid environment for many U.S. companies and investors who can buy stocks at enticing valuations, Kleintop says.

While Friday’s jobs report represents continued progress, it does not quite counteract signals that growth remains tepid and continued hurdles to a solid recovery remain. Just Thursday, Advanced Micro Devices announced it will cut 10% of its workforce, and a number of financial institutions, from Bank of America to Goldman Sachs to Credit Suisse, have also said they will cut payroll.

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